According to Engr. Farouk Ahmed, the Authority Chief Executive (ACE) of the Nigerian Midstream and Downstream Petroleum Regulatory Authority (NMDPRA), the Federal Government has scrapped the Petroleum Equalisation Fund (PEF) and the national transport allowance for oil marketers.
The PEF, established by Decree 9 of 1975, aimed to ensure price uniformity of petroleum products by reimbursing marketers for losses incurred during transportation.
Under the new liberalized market, the NMDPRA will no longer fix prices or release templates for petrol prices. Instead, prices will be determined by the forces of demand and supply.
The NMDPRA, along with the Federal Competition and Consumer Protection Commission (FCCPC), will monitor activities in the downstream sector to prevent profiteering by petroleum marketers. The focus will be on ensuring quality control, product availability, and licensing of importers.
While the market is open to all prospective importers who meet the requirements, the Nigerian National Petroleum Corporation (NNPC) remains the sole importer at present. The NNPC is expected to recover its costs based on the import and selling prices.
Importers are now free to source their foreign exchange from anywhere around the world, as the Central Bank of Nigeria (CBN) will not provide dollars since it is an open market.
The pricing components of petrol will no longer be specified by a template, and prices will be modulated to reflect the international gasoline market.
However, this does not mean that marketers can sell at any price. The NMDPRA will ensure that the market operates within regulatory guidelines to prevent arbitrary pricing.